Balancing the Economy #nlpoli

Both Delia Warren and Dwight Ball believe that we need to diversify the provincial economy and reduce our dependence on oil.

They both believe that our future should lie with more renewable energy.  Delia thinks there is room for things like wind farms.  Dwight, an original and enthusiastic Muskrateer, thinks we need to develop Gull Island as quickly as possible.

Both Delia and Dwight are wrong.

Duff in the hole encore #nlpoli

Oh dear.

The CBC has gone off to the mainland to get Duff Conacher to make a comment about the need for political finance reform in Newfoundland and Labrador.

Three observations:

1.  There is a desperate need for campaign finance reform in Newfoundland and Labrador.  SRBP has been writing about it relentlessly for a dozen years.  By comparison, the conventional media simply couldn't be arsed to cover the subject more often than not.

When they did notice something was amiss, as in 2006,  they were inclined to follow the line set by the government-of-the-day rather than have a look at the facts for themselves. What they would have discovered in the massive patronage scheme that ran here between 1996 and 2006, for example, was that the the level of misuse of public funds went *up* after 2003.

And after that they'd have found all sorts of other odd things.  Donations by companies getting hefty contracts from government?  Absolutely, a problem. Tired of writing about it.  Finance minister and later premier Tom Marshall financed his entire election campaign in 2011 out of a series of seven cheques from construction companies all of which did work for the government as Marshall shovelled cash into capital works at an unprecedented - and unsustainable - rate.

But what about political donations by town councils and the police?  Or what about a politician who ran a charity while he was in office that was funded by his government salary)?

2,  Conacher knows shag-all about what is happening here, as some of his previous comments have shown.  That actually weakens the case for campaign finance reform here since he is going to miss more than he hits.

Duff's good for the penetrating insights into the obvious - we need reform because it lends itself to corruption - but as with the CBC story his ignorance of the particulars makes him look like a bit of a goof at best or a blind nob at worst.  You see, Duff's been stonily silent on far worse things between 2003 and 2015 than anything he said before 2003 or since 2015.

3.  Stunned as me arse or what?  You really have to shake your head in disbelief at Dwight Ball's comments in the CBC story.  His election platform included a promise to change the campaign finance laws.  Instead of playing that up, Ball goes on the defensive making he look like he opposes finance reform.

That's the kind of stuff that must leave everyone outside of the Premier's Office banging their heads on the wall in frustration.  Inside the office, it's likely high-fives all around as the boss nailed another one to the wall.

Nailed his thumb more like it.

-srbp-

Up the harbour and down the shore... once more #nlpoli

Here's another one that started life as a column at the old Independent. 

And, as with "The politics of history" it can serve as a reminder of just how little has changed in local politics over a very long time.

In this case, it shows how little has changed in a very short time.

As it turned out, Danny Williams and his colleagues didn't create private sector jobs.  They created public sector ones that they knew were unsustainable. 

Responsibility #nlpoli

In the middle of all the screaming as the government unveiled its budget on Thursday,  the editor of a regional business magazine asked,  apparently in all seriousness,  "Biggest question of #Budget2016, How did NO ONE know that prev gov't spending was so out of line with revenues?"

Writing from her sabbatical in far-off England,  a CBC reporter with more than 20 years experience offered that the budget had "the reek of the wickedest hangover after a long, massive binge to end all binges."

"In 23 years in the biz,"  said the one to the other,  "what I'm seeing from afar looks like no other budget I've ever seen."  

"Same,"  said the other to the one.  "I've been following budgets around Atlantic Canada for 18 years and can't remember anything quite like this."

The simple observation on the second point is that we have seen budgets precisely like this one before, at least in the extent that it raised taxes and fees on all sorts of things.  We went through it routinely in the 1970s and in the 1980s and even into the early 1990s.  Budgets just like this one are well within the experience of both those observers' lifespans in this province and certainly within their professional lifespans.

So in observing the observers,  your humble e-scribbler found their shock a wee bit curious.  The only thing that was even more bizarre was the question about how no one had seen any of this coming.

Serendipity do dah #nlpoli

Some people on da Twitter were talking about verbal tics like saying “ya know.”

One of ‘em asks if the other had counted Danny Williams’ penchant for them.

Yes, butts in yer humble e-scribbler who was not part of the original discussion:  Cameron inquiry.  270 in a four hour stint, plus eight “quite frankly”s. If anyone on the Internet had that kind of obscure information, it would be The Scribbler or labradore.

Ya knows, right?

So then, you know your humble e-scribbler had to check the record by searching on SRBP for all appearances of the phrase “verbal tic”  and the plural.

Fraser Institute, National Newswatch, and other fools #nlpoli

If the issue wasn't so serious, it would be funny.

Newfoundland and Labrador is up the financial creek, according to Charles Lammam, an analyst with the Fraser Institute,  in a new opinion piece with a couple of his colleagues..  The cause is excessive government spending.  "Had the government restricted program spending increases since 2004/05 to the combined rate of inflation and population growth, Newfoundland & Labrador would now have a small surplus, not a large deficit."

The fundamental problem with Newfoundland and Labrador’s approach to public finances over the last decade is that the government increased spending during the good times as though they would never end. When resource prices ultimately fell, the province found itself at an unsustainable spending level.

You certainly won't get any argument from this corner about those observations.

The problem is that over the last decade, Lammam and the rest of the folks at the Fraser Institute have consistently told us that Danny Williams and Kathy Dunderdale  were the finest financial managers in the country among the provincial premiers.  That's significant because they are the premiers during the period when Lammam now says the government was spending way too much.  The two ideas don't fit together.

It's not as though we suddenly learned things we didn't know at any point over the past decade.  Some of us have been criticising the excessive increase in spending by the provincial Conservatives since 2006.  By the time we got to 2009,  Williams had admitted government spending was unsustainable. Dunderdale admitted the same thing every year she was in office.  It's not like the folks at the Fraser Institute could have missed the repeated admissions of fiscal mismanagement.

Yet they did.

Which Fraser Insitute conclusion should be accept?

Neither.

The Fraser Institute has produced such laughable "analysis" of Newfoundland and Labrador over such a long period of time that we can only conclude their most recent observations are a fluke.   What we should do is be extremely wary of pronouncements from folks like Fraser who can look at the same data and come to diametrically opposed conclusions.  There's a fairly obvious problem with the way they do their analysis.

And anyone pretends to be a psychic forecaster who says "never saw that coming" is someone we should just laugh at.

-srbp-

This is a revised version.  The original incorrectly identified the National Post as the source of the Lammam opinion piece

Up the harbour and down the shore, again #nlpoli

Today marks SRBP's anniversary.  The first post appeared on January 3, 2005.

Events of the past few weeks are a reminder of both how much has changed - we have a new government party - and at the same time, how little has changed.  Read on and you will see how little has changed.

Danny Williams and the Conservatives won the 2003 election promising to cure all the province's financial ills by "growing the economy."  Danny Williams said time and again that he was all about "jobs, jobs, jobs."   They'd attacked the Liberals over their poor financial management and promised to do things better.

In the middle of 2006,  CBC updated the world on Williams' progress. "These days," SRBP wrote, "the Premier is feeling a bit beleaguered, at least if a piece that aired recently on CBC is anything to go by.

The Premier's own take on things doesn't really have any evident shred of optimism. 

Rather the Premier appeared to be speaking defensively: gimme credit for saving the place from imminent bankruptcy. We have things going on that no one can control. In the meantime,we are working on planning to plant seeds for future growth. 

Interestingly enough, the province was never facing imminent bankruptcy: that was the Premier's fiction. The other factors he mentioned [in the interview] were specific to ... some companies in the fishery alone. The same factors - like Chinese competition and high exchange rates - don't affect other economic initiatives or don't affect other industries in the same way.  

The segments with the Premier were an interesting clue to Danny Williams' current state of mind. If March was manic, then June is borderline depressive.

That June 2006 post continued:

What was pretty clear in 2003 was the province could get out of its budget woes with some careful planning and with the continued economic growth coming from the offshore and Voisey's Bay. We all knew that growth was coming. Danny knew it too and that's why he ran the election on the up-note of growth. 

What no one knew was that oil would hit US$70 a barrel and the cash would be pouring in at a rate no one in the province had ever seen before. That allowed Danny Williams to avoid making a whole bunch of good decisions and to crank up spending to unprecedented and, and in light of the economic slowdowns, likely unsustainable heights. 

These days, though, there is no mistaking the point that the provincial government is in a hard spot. There are some factors in the economy that are beyond Williams' control. The stuff that is within his purview either foundered for one reason or another or simply have never existed. 

And that goes to the core point of this piece from shortly after the 2003 election: government needs to focus on what government does. 

In largest measure, since 2003 Danny Williams has focused his considerable talents in areas where, as Premier, he simply can't have an impact. He has been trying to run in the business sector rather than applying his managerial skills to running a government that will in turn create an environment where the private sector will develop the economy.

If he wanted to create jobs, he should have stayed in the private sector and put together the deals to create jobs and generate wealth. Instead, we have wound up with a mismatch between Danny Williams' considerable skills and the challenges at hand. 

Worse still, the centralizing tendency of government bureaucracy merely reinforces the most pernicious attributes of Williams' own hands-on leadership style. This has slowed down government's processes such that many policies are done one at a time rather than in parallel.
 Government has slowed to the point where it has taken three full years to get even the vaguest idea of some policy areas - like widening Hydro's mandate - and others, like the role and impact of the Business department or Danny Williams' own economic development seeds still haven't been seen at all.

... 

Running government is like drinking from a four-inch firehose.
 The most important thing for an incoming administration is having a way of figuring out how much to drink so it can avoid getting drowned. An incoming administration has a list of the things it definitely wants to accomplish and sets to work on them right away. For everything else there is a framework that identifies what is important, what is not important and gives a guide that helps triage the stuff that pops up along the way. 

In a sense, we are looking at a Premier and a government, three years into its mandate, that is increasingly being driven on some major issues instead of doing the driving. It's a variation on the idea discussed in another "Outside the Box" column from early 2004.

Back then, it looked like those columns were just penetrating insights into the flipping obvious. In hindsight, the observations seemed to be all too relevant.

2006.

Government spending ramped up to unsustainable heights based on oil at US$70 a barrel.

Now here we are in 2016 with Danny Williams' legacy of unprecedented financial mismanagement staring us plainly in the face.

And just to show how timely a column your humble e-scribbler wrote for the old Independent in late 2003,  here's that column again for your anniversary reading pleasure.  Note the bit at the end.  That isn;t what Dwight Ball talks about when he refers to consultations, but it is the sort of thing that would change the way government operates in this province fundamentally.

---------------------------------

Up the harbour and down the shore 

If Danny Williams wants to solve the government deficit problem by producing new jobs, as he said he would, he will have to create something between 50, 000 and 100, 000 new jobs in the province over the next eight years. 

To put that in perspective, there are about 219, 000 full-time equivalent jobs in the province today according to the Economics and Statistics branch of the provincial government. Since 1996, the economy produced about 31, 000 new jobs. To meet his commitments, Danny Williams will have to produce twice or three times as many jobs in the next eight years as the province could create in the past eight. 

And he will have to do that while providing increased health services to an aging population, providing education, services, roads, water and sewer and all the other things people expect from the provincial government. And he can'’t lay off government employees or increase the deficit. 

Sounds impossible? 

It is. Just look at our collective experience in the province and you can see why making promises like "“Jobs, Jobs, Jobs" ” is nothing short of silly. Politicians seem to forget that whenever government tries to create jobs, it fails and fails miserably. 

Stupidity, someone once said, is doing the same thing over and over and hoping for a different outcome. To stop being stupid, politicians need to focus not on creating jobs - something they can'’t do - and focus on politics, something they can do. 

That'’s why, a decade ago, the provincial government decided to get out of the job-making business. It decided the best it could do is creating a climate where entrepreneurs - – people with ideas - – could focus on making jobs that last. There was a bit more to it, though. The regional economic boards were supposed to be a way to let people in the different areas of the province decide for themselves what they would do to develop their local economy. 

The boards were also part of a wider move toward more regional control over a number of things, including health care and education. After all, politics is about who decides. In a province as big as this one, with a very small population, the "“who"” who decides often shouldn'’t be someone hundreds or thousands of kilometres from the issue. One major problem is that it has been hard to wrestle power out of the hands of bureaucrats and politicians in St. John'’s who want to keep deciding just about everything, right down to who can and cannot ride the local school bus. 

But the logic remains. Take Eastport, for example, or other areas of the province where local fishermen have had a greater say in how the resources they depend on are managed. They make sensible decisions based on science, their own knowledge and their own interests. They virtually eliminate poaching. They close fishing in areas where it needs to be closed and develop new ways to improve the price they get for their product. 

Maybe it is time to take these ideas a step farther and create a form of regional government that promotes economic development and administers health care, municipal services, education and even social welfare programs. New regional councils, elected regularly, would sort out local priorities and make decisions on that basis. The provincial government can look after setting broad strategic goals, much like the federal government set down basic principles for Medicare and then lets the provinces actually deliver the services. But the decisions on where hospitals go, or indeed if a new hospital is actually the best way to deliver health care in that particular region are left to the people who will be directly affected. 

Transferring power for some decisions from St. John'’s to new regional governments wouldn'’t be a magical solution to job creation or anything else. It also won'’t guarantee equal success everywhere. What it will do is involve more people in deciding what the future will look like in Newfoundland and Labrador. In an odd way, a new approach of regional government -– a county system - might help people realize that the issues up the harbour are much the same as the ones down the shore or in the four distinct regions of Labrador. 

For the provincial government, those politicians can look at projects like Voisey'’s Bay or the offshore for the government revenues they generate, rather than the number of jobs. The deficit problem might just get sorted out by thinking outside the box for a change.

-srbp- 

Consistency #nlpoli

"We need to find a way to bridge us [from] where we are currently until the commodities rebound and be [sic] the significant contributor we need them to be." That’s what Premier Dwight Ball told NTV’s Mike Connors in an interview that will air in full this coming Sunday.

The words are very familiar. 

We heard them just a few short months ago.

"I have laid out a five year plan,” Conservative finance minister Ross Wiseman told the House of Assembly last spring, “to bridge the commodity revenue dip and get us back to surplus, step by responsible step." 

Changing the direction. Changing the tone. #nlpoli

A month ago,  a CBC “analysis” by David Cochrane warned against a band of Liberals running the government with too much power.

Two weeks ago,  another CBC “analysis” by David Cochrane told us that Dwight Ball was an “unlikely” fellow to be Premier who now faced an enormous task of dealing with the government’s financial problems based on a campaign platform that was, supposedly, “greeted with enormous skepticism in the final week of the campaign.”

And now we have the latest Cochrane “analysis” that tells us that the public service is liking their new bosses.  The administration has been delivering on “Ball's campaign promises of evidence-based decision-making and to bring [sic] stability to cabinet by ending the practice of frequent shuffles, thereby leaving ministers in place long enough to build command of their portfolios.”

What changed?

Well, it certainly hasn’t been Dwight Ball and the Liberals he led to a substantive victory in the recent election.

Diversity #nlpoli

Labrador economy must diversify to survive, say opposition parties.

There is a CBC headline to conjure with.

Pure political magic for the two parties promising something different from what has gone on before.

Liberal leader Dwight Ball told CBC that we “must look at the other advantages that we would have available to us, things like power.” 

"This government talks a lot about the export of power. I want to talk about using that power as a competitive advantage for us."

Lorraine Michael, for the New Democratic Party,  said that "Government has to have long term plans that will deal with helping communities and workers when the issues arise."   Michael thinks that we have been too dependent on private sector corporations in Labrador.

No one has ever heard those ideas before

The Unsustainability Problem #nlpoli

The annual budget consultation farce started on Monday with a couple of sessions.

This year the provincial government has turned out a budget simulator that is supposed “to illustrate the tough budget choices” the provincial government is facing and “to promote a public dialogue on how we can set a sustainable fiscal course.”

The simulation can’t really do either of those things.  The information is relatively recent but the options to adjust income and spending don;t cover the full range of policy choices the government can make.  The ones it does offer are artificially limited to presented increases or decreases.  That’s a programming choice as much as anything else, but the reason for the artificial limitations is not important.  The fact is that the choices are deliberately limited.

The result is that people can’t really see what sorts of choices the provincial government might make to set a “sustainable fiscal course.” In that sense, the current “consultation” is as artificial as all the other ones the provincial government has run over the past decade or so.   People aren’t stupid.  They can handle the truth.

The politicians and bureaucrats can’t.

The Legacy #nlpoli

There is a lengthy list of political stories in contention to be the top political story of 2014.

Start the year with #darnknl, the failure of Newfoundland and Labrador’s Hydro generation to supply the capital city and surrounding communities with electricity last January.

It led to Kathy Dunderdale’s resignation as Conservative leader and Premier, which in turn led to the appointment of yet another interim Premier. That was followed by the Conservative leadership, the brief and ultimately ruined political career of Frank Coleman, and finally the second Conservative leadership contest that ended with the selection of Premier Paul Davis.

The year ended with a political crisis as Paul Davis, launched a political war with the federal government over a promise supposedly broken. And then there has been the string of by-election victories by the Liberals and losses by the Conservatives.

Or the financial mess,  triggered by the 40% drop in oil prices.  It promises to produce one of the worst deficits on record this year – unless the Conservatives have been bullshitting, like they have done so many times before – or a very harsh budget next year.

Either of these stories alone could be the top political story of 2014.  But the big political story of 2014 is the element that links them all together in one.

Government Spending and the Economy – Again #nlpoli

A post last week offered a quick confirmation that, as finance minister Ross Wiseman said,  provincial government spending accounts for about 30% of the gross domestic product measured as spending.

A couple of people on Twitter took issue with that idea, apparently.  They also took issue, as it seems, with the contention around these parts that the situation Wiseman described was a matter of government policy as opposed to the random changes in the economy.

Let’s dig into this in more detail.  It really is quite important as the government has a very serious financial problem to deal with, what with the growing deficits and the weakening income. Wiseman mentioned the impact of government spending on the economy, incidentally, as a reason why he could not cut spending very much, if at all. 

A Greek Tragedy #nlpoli

While you are busily mulling over the possible implications the drop in oil prices might have on the provincial government’s budgets,  distract yourself by pondering some of the other implications of low oil prices on the provincial economy.

The Paris-based International Energy Agency thinks that about 25% of Canadian energy projects would be in jeopardy if oil goes below US$80 a barrel and stays there for any length of time.  As the Financial Post noted in its report last week on the IEA opinion,  that would put a number of newer more expensive projects in Alberta and maybe in Saskatchewan in doubt.  Norway’s Statoil has already shelved an oil sands project.

Globally,  the low prices would also make about three percent of all energy projects dodgy propositions.  Some of those are deep water projects like those in the Orphan Basin offshore Newfoundland. The Orphan isn’t turning up in any of these global forecasts because people don’t know enough about the prospects there to determine if they are even commercially viable.

Double-down Locke #nlpoli

“I didn’t see this coming,”  Memorial University economist Wade Locke told the Telegram’s James McLeod the other day. Locke was talking about the dramatic drop in oil prices over the past week and a half.

The day before, Locke was on VOCM’s morning talk show dismissing this low oil price stuff as just a passing thing.  No biggie.  And while everyone else is figuring the government is headed farther up a financial shit creek of Amazon proportions, Locke was absolutely confident that prices would go back up and all would be right. 

Sure, government might have to do some trimming, Wade offered, but they should do it gradually over time.  Like losing weight, he said.  If I told you that you had to lose 10 pounds, it would be hard to do it quickly.  But over time, much easier to do.

There’s something truly laughable about Locke’s metaphor because basically Wade is to sound management of public money what a Double-Down from KFC is to heart-smart nutrition.

Pension deal = good news #nlpoli

Three things:

1.  The agreement to deal with the unfunded pension liability is a good thing for workers and for taxpayers.  It deals with a substantial financial problem, which is the bonus for taxpayers, while preserving defined benefit pension plans for workers, which is the big win for them.  The costs are relatively modest in terms of increased premiums, averaging, and early retirement age.

2.  This is only part of the province’s financial problem.  It’s the easiest one to deal with.  The others – Muskrat Falls and the embedded unsustainable overspending – are much larger financially and it will fall to the next administration after the Conservatives will have to deal with.  Coming to grips with them won’t be easy by any means.

At least Tom Marshall took care of the problem he created.  In an interview with CBC on Tuesday,  Marshall tried to blame others for the problem and claim credit for fixing it for himself,  but as with pretty much everything a provincial Conservative politician says,  nothing could be further from the truth. 

Efforts to deal with the unfunded liability started in 1997.  A decade later,  the problem with less than half the size it is today.  Instead of dealing with it then, Marshall began the program of fiscal mismanagement that ballooned the unfunded pension liability and added all the other financial mess that we’ll be cleaning up for decades to come.

3.  The St. John’s Board of Trade,  the Canadian Federation of Independent Business, and other similar lobby groups should be ashamed for providing false information to the public while pretending it was truthful and unbiased. Even in an election year, some politician would be doing a public service by issuing an appropriate tongue-lashing to the crop of bullshit-mongers running those two groups.  The Board of Trade in particular has a lot to answer for.  They have screwed taxpayers twice;  first by being party to the Muskrat Falls mess and then by attacking public sector workers with falsehoods.

-srbp-

Mystery Meat #nlpoli

The Telegram’s exceedingly generous headline said that Conservative leadership candidate Paul Davis put meat to the bones of his  campaign on Friday by announcing details of his policies. 

In reality,  Davis offered vague platitudes for the most part with very little substance to any of his plans.  There’s nothing surprising in that.  Pretty well all the provincial politicians and parties have kept their plans and ideas vague.

You can see the vagueness in Davis’ financial priorities.

Conservative Misinformation and the Public Sector Debt Problem #nlpoli

There is no limit to how selectively provincial Conservatives will read a document in order to find some microscopic filament that might possibly confirm that they have really been running the most magnificent administration in the history of the galaxy.

They still insist, for example,  that they are the tops in leadership and accountability even though the most recent poll shows that 77% of the people in the province don’t think so.

Conservatives also insist they have done financial miracles.  No less a personage than the party’s vice president took to the Twitter on Monday to tell everyone that:

According to Fraser Institute, SK and NL are the only provinces that reduced their public debt since 2007.

Well,  they said a lot more than that,  but evidently Mark Whiffen and didn’t need to read anything but that. Since the rest of us are not obliged or inclined to such delusions,  let’s see what the gang at the Fraser Institute actually said.

The Shared Delusion #nlpoli

Tom Marshall is a typical politician.  He got into politics to make things better.

And, as he reaches the end of his political career,  Tom feels a little frustrated or disappointed in how things turned out.  Marshall’s big hopes didn’t turn into equally big results.

So he blames others.

Political Fashionistas #nlpoli

Before the year is out, we will have yet another strategy from the provincial government.

We were supposed to have this one on July 1, however like pretty well everything associated with the current crowd running the place, it is a day late.  The minister responsible for the strategy – Fairity O’Brien – says we will now have it some unspecified time in the fall.  That will be after Fairity releases a document that tells us what the government heard during some sort of consultation process that they are almost as fond of as they are of strategy writing.

The thing will likely also be a dollar short, as well, if recent experience is any guide.  You see this “population growth strategy” is actually the second kick at the cat for the provincial government.  Their existing strategies aimed at dealing with some of the factors affecting population were all dismal failures.